Crude rises above $106 a barrel as dollar falls
By Moming Zhou & Nick Godt, MarketWatch
Last Update: 12:11 PM ET Mar 7, 2008
SAN FRANCISCO (MarketWatch) -- Crude-oil futures reversed earlier losses Friday
and rose above $106 a barrel for the first time as the greenback fell anew,
increasing attractions of dollar-denominated commodities to buyers holding other
currencies.
The rise came even after data showed the largest drop in U.S. payrolls in five
years, indicating the world's largest oil consumer is falling into a recession.
Crude oil for April delivery gained $1.07 to an intraday high of $106.54 a barrel
on the New York Mercantile Exchange in late morning trading. It earlier dropped
to an intraday low of $103.91. Futures were last up 53 cents, or 0.5%, at $106 a
barrel.
The dollar dropped to a new low against the euro Friday as the euro hit $1.5459.
A weaker dollar makes dollar-denominated commodities, such as oil, less expensive
for buyers holding other currencies. Those buyers tend to bid up prices. See
Currencies.
The odds of the Federal Reserve cutting interest rates by 75 basis points to
2.25% jumped on Friday to 96%, futures trading on the Chicago Board of Trade
showed. Further rate cuts will put more downward pressure on the dollar.
"The Fed's rate cuts are going to cheapen the dollar and push up oil prices,"
said Daniel Flynn, a trader at futures brokerage Alaron Trading. "Crude's next
stop is $110."
Crude was in the negative in most morning trading on jobs data. In the clearest
suggestion of a recession, U.S. nonfarm payrolls fell by 63,000 in February, the
second straight decline, the Labor Department reported Friday. It was the largest
drop in payrolls since March 2003, when the economy was struggling through a
jobless recovery. See Economic Report.
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